Here's some good news for the ailing aviation sector

Here's some good news for the ailing aviation sector

The airline industry was impacted last year by the global economic slowdown but the growing Indian and Chinese markets are expected to help boost the sector, Civil Aviation Minister Ajit Singh said.

"The global economy faced rough weather in 2011. The effects of rising fuel cost, European debt crisis were felt across the world and the aviation industry also felt the tremors. As per estimates, cargo markets worldwide contracted by 0.7 per cent," he said after inaugurating the third edition of International Aviation exhibition 'India Aviation 2012' at the Begumpet Airport in Hyderabad.

"Growth in demand lagged behind the increase in capacity for both passengers and cargo segments, putting downward pressure on load factors and yields," Singh said, adding that the skies are not expected to clear any time soon and 2012 could prove to be equally challenging.

Here's some good news for the ailing aviation sector

As per market estimates, the European airlines are going to be hit the hardest in 2012 but it is expected that Asia Pacific, led by expanding Indian and Chinese markets, will provide the boost to the sector, Singh said.

"This trend is likely to continue over the next few years, shifting aviation's centre of gravity eastward. By 2015, the Asia-Pacific is expected to account for 37 per cent of the passenger traffic, while traffic associated with Europe and North America will fall to 29 per cent," Singh said.

The global aircraft fleet is expected to double by 2030 and the Asia-Pacific will account for about a third of all new aircraft deliveries, the minister said, pointing out that for the civil aviation industry, Asia-pacific region is projected to account for two third of the profit forecast for 2012.

Here's some good news for the ailing aviation sector

He added that India offers enormous opportunities and potential for aviation companies worldwide to collaborate and expand their presence in the region.

In the last decade, India has made tremendous strides in aviation with traffic carried by domestic airlines growing nearly six-fold from 13 million to around 60 million in 2011, he said.

"India is the fastest growing civil aviation market in the world and by 2020 will be amongst first three markets with about 420 million passengers being handled by the Indian airport system against 140 million in 2010," he said.

Here's some good news for the ailing aviation sector

Despite the challenges faced due to the rising fuel costs, fierce competition and infrastructure bottlenecks, the government is committed to development of the sector and has introduced several policies and regulations to encourage private sector participation and investments in the sector, Singh said.

Singh said India offered enormous opportunities and potential for aviation companies worldwide to collaborate and expand their presence in the region.

In the last decade, India has made tremendous strides in aviation with traffic carried by domestic airlines growing nearly six-fold from 13 million to around 60 million in 2011, he said.

Here's some good news for the ailing aviation sector

"India is the fastest growing civil aviation market in the world and by 2020 will be amongst first three markets with about 420 million passengers being handled by the Indian airport system as against 140 million in 2010," he said.

Despite the challenges faced due to rising fuel costs, fierce competition and infrastructure bottlenecks, government is committed for development of the sector and has introduced several policies and regulations to encourage private sector participation and investments in the sector, the minister said.

"A large number of Greenfield and modernisation projects in airport sector are under development on PPP model across the country to develop facilities conforming to international standards and operational performance."

Here's some good news for the ailing aviation sector

In order to attract foreign investors, the government was allowing 100 per cent FDI in Greenfield airports under the automatic route to facilitate world-class airports in the country, Singh said.

An appropriate economic regulatory framework for future airport is also being worked out to attract investment and ensure their viability.

As the cargo handled at Indian airports witnessed a growth of CAGR 10.9 per cent in the last five years, with international cargo accounting for two-thirds of the total, the Civil Aviation Ministry is formulating an Air Cargo Promotion Policy, which will be brought forward for consultation, he added.